SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of May , 1996
----------------------------------------------------------------
GST Telecommunications, Inc.
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(Translation of Registrant's Name Into English)
999 West Hastings Street
Suite 1030
Vancouver, British Columbia
CANADA V6C 2W2
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(Address of Principal Executive Offices)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F).
Form 20-F /X/ Form 40-F / /
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also hereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934).
Yes / / No /X/
<PAGE>
Province of QUARTERLY REPORT
British Columbia
BRITISH COLUMBIA SECURITIES COMMISSION FORM 61
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INSTRUCTIONS
This report is to be filed by Exchange Issuers within 60 days of the end of
their first, second and third fiscal quarters and within 140 days of the end of
their fourth fiscal quarter. Three schedules (typed) are to be attached to this
report as follows:
SCHEDULE A: FINANCIAL INFORMATION
Financial information prepared in accordance with generally accepted accounting
principles for the fiscal year-to-date, with comparative information for the
corresponding period of the preceding fiscal year. This financial information
should consist of the following:
For the first, second and third fiscal quarters:
An interim financial report presented in accordance with Section 1750 of the
C.I.C.A. Handbook. This should include a summary income statement (or a
statement of deferred costs) and a statement of changes in financial position. A
summary balance sheet is also to be provided.
For the fourth fiscal quarter (year end):
Annual audited financial statements.
SCHEDULE B: SUPPLEMENTARY INFORMATION
The supplementary information set out below is to be provided when not included
in Schedule A.
1. For the current fiscal year-to-date:
Breakdown, by major category, of those expenditures and costs which are
included in the deferred costs, exploration and development expenses, cost
of sales or general and administrative expenses set out in Schedule A.
State the aggregate amount of expenditures made to parties not at arm's
length from the issuer.
2. For the quarter under review:
(a) Summary of securities issued during the period, including date of
issue, type of security (common shares, convertible debentures, etc.),
type of issue (private placement, public offering, exercise of
warrants, etc.), number, price, total proceeds, type of consideration
(cash, property, etc.), and commission paid.
(b) Summary of options granted, including date, number, name of optionee,
exercise price and expiry date.
3.As at the end of the quarter:
(a) Particulars of authorized capital and summary of shares issued and
outstanding.
(b) Summary of options, warrants and convertible securities outstanding,
including number or amount, exercise or conversion price and expiry
dates.
(c) Total number of shares in escrow or subject to a pooling agreement.
(d) List of directors.
SCHEDULE C: MANAGEMENT DISCUSSION
Review of operations in the quarter under review and up to the date of this
report, including brief details of any significant event or transaction which
occurred during the period. The following list can be used as a guide but is not
exhaustive;
Acquisition or abandonment of resource properties, acquisition of fixed
assets, financings and use of proceeds, management changes, material
contracts, material expenditures, transactions with related parties, legal
proceedings, contingent liabilities, default under debt or other
contractual obligations, special resolutions passed by shareholders.
Specifically, the managment discussion must include:
(a) disclosure of and reasons for any material differences in the actual
use of proceeds from the previous disclosure by the issuer regarding
its intended use of proceeds; and
(b)
a brief summary of the investor relations activites undertaken by or
on behalf of the issuer during the quarter and disclosure of the
matiral terms of any investor relation arrangements or contracts
entered into by the issuer during the quarter.
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ISSUER DETAILS ISSUER TELEPHONE NO. FOR QUARTER DATE OF REPORT
NAME OF ISSUER ENDED Y/M/D
GST Telecommunications, Inc. (360) 254-4700 96/03/31 96/05/15
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ISSUER'S ADDRESS PROVINCE POSTAL CODE
4317 NE Thurston Way Vancouver, WA 98662
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CONTACT PERSON CONTACT'S POSITION TELEPHONE NO.
Robert H. Hanson Chief Financial Officier (307) 527-6048
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CERTIFICATE
The three schedules required to complete this Quarterly Report are attached and
the disclosure contained therein has been approved by the Board of Directors. A
copy of this Quarterly Report will be provided to any shareholder who requests
it.
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DIRECTOR'S SIGNATURE PRINT FULL NAME DATE SIGNED
Y/M/D
/s/ Robert H. Hanson Robert Hanson 96/05/15
DIRECTOR'S SIGNATURE PRINT FULL NAME DATE SIGNED
Y/M/D
/s/ W. Gordon Blankstein W. Gordon Blankstein 96/05/15
<PAGE>
GST TELECOMMUNICATIONS, INC.
Consolidated Balance Sheets
(stated in U.S. dollars)
March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
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March 31 March 31
1996 1995
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<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash equivalents $ 136,350,723 5,406,023
Accounts Receivable 3,334,821 2,369,259
Other Receivables 5,022,275 0
Notes Receivable 548,178 770,903
Marketable Securities 5,525,135 1,989,994
Inventory 947,199 357,243
Prepaid Expense 1,739,495 389,481
- ------------------------------------------------------------------------------------------------------------
153,467,826 11,282,903
Notes Receivable 744,187 328,993
Investment in Joint Ventures 2,255,710 3,214,059
Other Investments 0 100,984
Property and Equipment, Net 58,321,711 15,369,031
Other Assets, Net 20,910,741 10,096,024
Deferred Financing Costs, Net 8,583,880 623,558
- ------------------------------------------------------------------------------------------------------------
$ 244,284,055 41,015,552
============================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 11,332,973 5,196,287
Short Term Payable 2,106,894 846,573
Deferred Revenue 303,788 181,496
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13,743,655 6,224,356
Deferred Income Taxes 0 21,368
Long Term Debt 205,543,985 8,614,091
Non-controlling Interest in Subsidiaries 3,040,160 2,626,455
Shareholders' Equity
Share Capital 57,671,876 28,846,930
Committment to Issue Shares 747,026 1,494,051
Deficit 36,462,647 6,811,699
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21,956,255 23,529,282
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$ 244,284,055 41,015,552
============================================================================================================
</TABLE>
Approved by the Board of Directors:
/s/ ROBERT H. HANSON Director
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/s/ W. GORDON BLANKSTEIN Director
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<PAGE>
GST TELECOMMUNICATIONS, INC.
Consolidated Statement of Operations and Deficit
(stated in U.S. dollars)
For the Six Months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
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March 31 March 31
1996 1995
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<S> <C> <C>
Revenues:
Telecommunication Services $ 11,534,405 3,214,195
Telecommunication Product 3,327,972 1,973,183
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14,862,377 5,187,378
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Cost of Goods Sold/Services:
Telecommunication Services 12,089,515 2,270,404
Telecommunication Product 1,488,757 700,930
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13,578,272 2,971,334
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Gross Margin 1,284,105 2,216,044
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Operating Expenses
Audit and Legal 1,349,563 328,845
General,Selling and Administration 7,997,310 2,064,514
Marketing, Travel, and Promotion 2,396,712 1,002,724
Research and Development 599,653 558,321
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12,343,238 3,954,404
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Loss from Operations before Depreciation
and Amortization 11,059,133 1,738,360
Depreciation and Amortization 3,459,226 724,252
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Loss from Operations 14,518,359 2,462,612
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Other Expenses (Income):
Interest Income (2,396,758) (145,223)
Interest Expense 7,968,288 68,404
Foreign Exchange (Income)/Loss (18,173) 6,000
Loss from Joint Ventures 603,307 305,611
Other Non-op Expense 53,833 200,880
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6,210,497 435,672
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Loss before Income Taxes
and Non-controlling Interest 20,728,856 2,898,284
Income Tax Expense 17,916 (37,779)
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Loss before Non-controlling Interest
in Income of Subsidiaries 20,746,772 2,860,505
Non-controlling Interest in Loss of Subsidiaries (239,028) (689,005)
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Loss for the Period 20,507,744 2,171,500
Deficit, Beginning of Period 15,954,903 4,640,199
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Deficit, End of Period $ 36,462,647 6,811,699
============================================================================================================
Loss per Share $ 1.04 0.17
============================================================================================================
</TABLE>
<PAGE>
GST TELECOMMUNICATIONS, INC.
Consolidated Statements of Changes in Financial Position
(stated in U.S. dollars)
For the Six Months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
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March 31 March 31
1996 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash provided by (used in)
Operations:
Loss for the Period $ (20,507,744) (2,171,500)
Items not involving Cash:
Non-controlling Interest in Loss of Subsidiaries (239,028) (689,005)
Loss from Joint Venture 603,307 305,611
Accretion of Interest & Deferred Financing Amortization 7,381,746 0
Amortization and Depreciation 3,459,226 724,252
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(9,302,493) (1,830,642)
-----------------------------------------------------------------------------------------------------
Changes in Non-cash Operating Working Capital:
Accounts Receivable (4,051,430) (947,945)
Notes Receivable (468,783) 4,438,461
Inventory (560,110) 17,269
Prepaid Expenses (1,082,328) (254,700)
Accounts Payable and Accrued Liabilities (1,976,359) 3,094,346
Deferred Revenue (96,504) 47,557
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(8,235,514) 6,394,988
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Cash provided by (used in) Operations (17,538,007) 4,564,346
-----------------------------------------------------------------------------------------------------
Financing Activities:
Issuance of Common Stock and Exercise of Warrants 6,314,474 5,266,265
Deferred Financing Costs (7,989,406) (553,909)
Sale of Shares of a Subsidiary 0 300,000
Proceeds from Long Term Debt 180,001,683 8,614,091
Principal Payments on Long Term Debt (546,508) 0
-----------------------------------------------------------------------------------------------------
177,780,243 13,626,447
- ------------------------------------------------------------------------------------------------------------
Investments:
Acquisition of subsidiaries, net of cash acquired 11,102 0
Purchase/Sale of Marketable Securities (4,654,511) (1,147,386)
Acquisition of Property and Equipment (24,089,253) (11,236,968)
Other Investments 0 (297,279)
Purchase of Other Assets (1,172,083) (4,321,730)
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(29,915,847) (17,003,363)
-----------------------------------------------------------------------------------------------------
Increase (Decrease) in Cash 130,326,389 1,187,430
Cash, Beginning of Period 6,024,334 4,218,593
- ------------------------------------------------------------------------------------------------------------
Cash, End of Period $ 136,350,723 5,406,023
============================================================================================================
</TABLE>
<PAGE>
GST TELECOMMUNICATIONS, INC.
QUARTERLY REPORT
FOR THE QUARTER ENDED MARCH 31, 1996
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Schedule B: Supplementary Information
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1. During the six months ended March 31, 1996, $ 94,999.98 (U.S. funds) was
paid to a company owned by a director for consulting services.
2. During the quarter ended March 31, 1996:
a) Securities issued:
Jan. 5/96 - 168,249 common shares issued @ $4.44 (US funds) per share
for deemed value of $747,026 (US funds). re: Second Installment to
NACT Minority Shareholders.
Feb. 20/96 - 4,500 common shares issued @ $10.00 (CDN funds) per share
for cash proceeds of $32,715 (US funds). re: Exercise of warrants.
Feb. 22/96 - 2,000 common shares issued @ $10.00 (CDN funds) per share
for cash proceeds of $14,540 (US funds). re: Exercise of warrants.
Feb. 29/96 - 4,000 common shares issued @ $10.00 (CDN funds) per share
for cash proceeds of $29,080 (US funds). re: Exercise of warrants.
Mar. 1/96 - 6,000 common shares issued @ $ 8.00 (US funds) per share
for deemed value of $48,000 (US funds). re: Aquisition of Reservations
Inc. (Hawaii On Line).
Mar. 4/96 - 2,000 common shares issued @ $10.00 (CDN funds) per share
for cash proceeds of $14,582 (US funds). re: Exercise of warrants.
Mar. 7/96 - 1,876 common shares issued @ $ 3.55 (US funds) per share
for cash proceeds of $6,660 (US funds). re: Exercise of stock options.
Mar. 7/96 - 1,500 common shares issued @ $ 4.25 (US funds) per share
for cash proceeds of $6,375 (US funds). re: Exercise of stock options.
Mar. 12/96 - 23,983 common shares issued @ $10.00 (CDN funds) per
share for cash proceeds of $175,268 (US funds). re: Exercise of
warrants.
Mar. 21/96 - 150 common shares issued @ $4.25 (US funds) per share for
cash proceeds of $637 (US funds). re: Exercise of stock options.
Mar. 21/96 - 12,500 common shares issued @ $10.00 (CDN funds) per
share for cash proceeds of $91,775 (US funds). re: Exercise of
warrants.
Mar. 25/96 -11,500 common shares issued @ $10.00 (CDN funds) per share
for cash proceeds of $84,445 (US funds). re: Exercise of warrants.
Mar. 26/96 - 68,792 common shares issued @ $10.00 (CDN funds) per
share for cash proceeds of $505,140 (US funds). re: Exercise of
warrants.
<PAGE>
Mar. 28/96 - 21,500 common shares issued @ $10.00 (CDN funds) per
share for cash proceeds of $157,659 (US funds). re: Exercise of
warrants.
Mar. 29/96 - 665,000 common shares issued @ $10.00 (CDN funds) per
share for cash proceeds of $4,909,135 (US funds). re: Exercise of
warrants.
b) Options granted:
235,000 options granted @ $6.75 (US funds) per share. Issued as of
January 5, 1996 for the 1996 employee stock option plan. Expiration
date of January 4, 2001.
Warrants granted:
300,000 warrants granted @ $6.75 (US funds) per share. Issued as of
October 1, 1995. Expiration date of September 30, 2000.
3. As at March 31, 1996:
(a) Share Capital
An unlimited number of common shares without nominal or par value
issued: 20,824,901 common shares for $ 57,671,876 (U.S. funds).
(b) Outstanding options, warrants and convertible securities:
Exercise/
Description # Common Conversion Expiration
of Securities Shares Issuable Price Date
-------------------------------------------------------------------------
Options 350,650 $4.25 U.S. Jun. 23/97
Options 10,000 $4.50 U.S. Oct. 3/97
Options 40,000 $4.38 U.S. Feb. 21/98
Options 193,140 $5.00 U.S. Feb. 28/99
Options 50,000 $5.00 U.S. Aug. 16/99
Options 38,942 $3.55 U.S. Jan. 4/2000
Options 925,000 $6.75 U.S. Sept. 21/2000
Options 235,000 $6.75 U.S. Jan. 4 /2001
Warrants 250,000 $5.52 U.S. Oct. 23/96
Warrants 125,000 $5.62 U.S. Apr. 26/97
Warrants 300,000 $6.75 U.S. Sept. 30/2000
There is a right outstanding to purchase 250,000 units at a
price per unit equal to the average Common Share price for the
30 trading days preceding the date of the purchase of the units.
The units are comprised of one Common Share and one-half of a
share purchase warrant exercisable for two years at a price
equal to 120% of the unit purchase price.
(c) Total shares in escrow or subject to pooling: 1,750,000.
<PAGE>
(d) List of Directors
Ian Watson
Robert H. Hanson
Peter Legault
W. Gordon Blankstein
Jack Armstrong
John Warta
Takashi Yoshida
Thomas E. Sawyer
Stephen Irwin
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Schedule C : Management Discussion
- --------------------------------------------------------------------------------
1) See attached schedule
2) Cost of Sales for the period ended March 31, 1996 comprised of the
following:
Beginning Inventory October 1, 1995 $ 387,089
Carrier Usage $ 8,852,470
Engineering and Operations 2,531,300
Direct Materials 2,023,343
Direct Labor 441,719
Overhead 289,550 14,138,382
---------------------------------
14,525,471
Ending Inventory at March 31, 1996 947,199
---------------------
Cost of Goods Sold $ 13,578,272
=====================
<PAGE>
GST TELECOMMUNICATIONS, INC.
Audit & Legal Expense Detail
(Stated in U.S. Dollars)
For the six months ended March 31, 1996
(unaudited)
Accounting Fees $ 109,871
Legal Fees $ 506,284
Consulting Fees $ 542,718
Outside Services $ 123,177
Salaries & Benefits $ 51,143
Travel & Entertainment $ 5,339
Miscellaneous $ 11,031
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$1,349,563
==========
<PAGE>
GST TELECOMMUNICATIONS, INC.
General & Administrative Expense Detail
(Stated in U.S. Dollars)
For the six months ended March 31, 1996
(unaudited)
Salaries & Benefits $3,750,067
Customer Service $ 464,771
Office Facilities & Expense $2,878,550
Telephone $ 233,478
Other Operating Costs $ 470,335
Finance $ 200,109
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$7,997,310
==========
<PAGE>
GST Telecommunications, Inc.
Sales & Marketing Expense Detail
(Stated in U.S. Dollars)
For the six months ended March 31, 1996
(unaudited)
Salaries and Benefits $1,159,799
Advertising $ 283,338
Marketing $ 108,152
Travel - Lodging and Meals $ 389,895
Shareholder Information $ 26,143
Promotion $ 204,159
Miscellaneous $ 225,226
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$2,396,712
==========
<PAGE>
GST Telecommunications, Inc.
Research & Development Expense Detail
(Stated in U.S. Dollars)
For the six months ended March 31, 1996
(unaudited)
Salaries & Wages $ 454,933
Fringe Benefits $ 63,691
Payroll & Other Taxes $ 50,043
Legal & Accounting $ --
Travel & Entertainment $ 6,888
Office Expenses & Supplies $ 5,147
Telephone & Other Utilties $ 30,302
Buidling Lease $ 12,524
Building & Equipment Maintenance $ 3,380
Public Relations $ --
Research & Development $ 18,776
Advertising $ --
Consulting $ 25,150
Other Selling Expenses $ --
Corporate Overhead Allocation $ 17,596
Less: Capitalized Expenses $ (88,777)
----------
$ 599,653
=========
<PAGE>
SCHEDULE C
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES. Revenues for the six months ended March 31, 1996 increased
$9,674,999, or 186.5%, to $14,862,377 from the six months ended March 31, 1995.
The increase resulted from a $8,320,210, or 258.9%, increase in
telecommunications services revenues and a $1,354,789, or 68.7%, increase in
telecommunications product revenues of the Company's wholly-owned subsidiary,
National Applied Computer Technologies, Inc. ("NACT"). Telecommunications
service revenues increased primarily as a result of wholesale and carrier
revenues of the Company's wholly-owned subsidiary, GST Net, Inc., which provides
long distance and other services, and long distance and other service revenues
of International Telemanagement Group, Inc. ("ITG"), which was acquired
effective May 1, 1995. The 1995 period preceded the date of acquisition. The
increase in telecommunications services revenues also was attributable to other
long distance operations of the Company, including those of its wholly-owned
subsidiary, Wasatch International Network Services, Inc., and increased revenues
generated by the Company's competitive access networks. The Company also
experienced increases in product revenues due to increased unit sales of
telecommunications switching and network management and billing systems at NACT.
The gross profit margin with respect to NACT's manufacturing operations was
55.3% for the six months ended March 31, 1996, compared to 64.5% for the six
months ended March 31, 1995.
COST OF GOODS/SERVICES SOLD. Total cost of goods/services sold
increased $10,606,938 to $13,578,272, or 91.4% of total revenues, for the six
months ended March 31, 1996 from $2,971,334, or 57.3% of total revenues, for the
six months ended March 31, 1995. Product cost of goods sold increased to
$1,488,757, or 44.7% of product revenues, for the six months ended March 31,
1996 from $700,930, or 35.5% of product revenues, for the six months ended March
31, 1995. Cost of services was $12,089,515, or 104.8% of telecommunications
revenues for the six months ended March 31, 1996, compared to $2,270,404, or
70.6% for the six months ended March 31, 1995. The cost of telecommunications
revenues sold exceeded revenues from such services in the 1996 period
principally because of the fact that many of the Company's competitive access
networks continue to incur service costs which exceeded revenues, a
characteristic of networks in the early stages of operations. Although the
Company expects that cost of services will decrease as a percentage of total
telecommunications services revenues as the Company expands its
telecommunications services businesses, the Company expects that total costs of
goods/services sold will increase as a
<PAGE>
percentage of total revenues as telecommunications services revenues become an
increasing percentage of total revenues.
OPERATING EXPENSES. Total operating expenses for the six months ended
March 31, 1996 increased by $8,388,834 and as a percentage of revenues increased
from 76.2% to 83.1%, principally as a result of higher salary and benefit costs
incurred during the period as the Company continues to add a significant number
of sales, marketing and management employees. Also contributing to the increase
was a higher level of legal, audit, travel and other expenses associated with
the Company's financing and investing activities. The Company expects salary and
benefit costs to continue to increase as it continues to expand its network
operations. Research and development expenditures of NACT remained relatively
constant, but decreased as a percentage of telecommunications product revenue
from 28.3% to 18.0% as revenues increased.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
to $3,459,226 during the six months ended March 31, 1996 from $724,252 during
the 1995 period, principally as a result of the increased provision of
depreciation occasioned by a higher asset base than existed in the prior period.
The Company expects that depreciation will continue to increase as it continues
to expand its network operations and implements its switched and enhanced
services strategy.
OTHER EXPENSES. Other expenses increased to $6,210,497 during the six
month period ended March 31, 1996 from $435,672 from the 1995 period,
principally as a result of an increase in interest expense due to the $180
million private placement of debt securities that the Company completed in
December 1995. To a lesser extent, the increase was influenced by higher losses
from joint ventures. The foregoing expenses were offset, to some degree, by an
increase of $2,251,535 in interest income, as a result of the investment of the
proceeds of the aforementioned debt financing.
LIQUIDITY AND CAPITAL RESOURCES
The Company has incurred significant operating and net losses and
negative EBITDA as a result of the development and operation of its networks and
other capital expenditures. The Company expects that such losses and negative
EBITDA will continue to increase as the Company emphasizes the development,
construction and expansion of its networks and builds its customer base and that
cash provided by operations will not be sufficient to fund the expansion and
development of its networks, the implementation of its switched and enhanced
services strategy and the expansion of its other telecommunications products and
services.
Net cash provided by equity issuances pursuant to the exercise of
options and warrants was $6,323,261 for the six months ended March 31, 1996.
With the exception of NACT, the Company does not generate positive EBITDA from
its operating activities. The Company
-2-
<PAGE>
intends to retain the cash flow derived from NACT's operations to fund NACT's
expanded research and development, manufacturing and sales and marketing.
The Company made capital expenditures of $24,089,253 in the six months
ended March 31, 1996 and $11,236,968 in the six months ended March 31, 1995.
To date, the Company has financed its capital expenditures,
acquisitions, working capital requirements and operating losses principally
through the exchange or sale of securities and borrowings under the Tomen
Facility (as hereinafter defined). The Company has financed, and expects to
continue to finance, the development, construction and initial operating losses
of its networks on a project by project basis, generally through separately
capitalized operating subsidiaries.
In October 1994, the Company and a subsidiary of Tomen Corporation
("Tomen") entered into agreements (the "Tomen Facility") pursuant to which Tomen
agreed to make available up to a total of $100.0 million of financing for
competitive access network construction and development. Tomen has a right of
first refusal to evaluate on a project by project basis and finance each network
project up to the limit of such facility. The Company has received approvals for
approximately $45.0 million of debt financing under the Tomen Facility for its
network projects in Southern California, Tucson, Arizona and Albuquerque, New
Mexico, with respect to which approximately $17.5 million of indebtedness is
currently outstanding. An additional $38.3 million of financing proposals has
been submitted for approval.
At March 31, 1996, the Company had cash and cash equivalents of
$141,875,948, compared to $7,396,017 at March 31, 1995. The Company continues to
invest substantial sums of capital for the development and construction of
telecommunications networks. The Company will be dependent on additional capital
to fund its growth, as well as to fund continued losses from operations.
Management believes that its cash resources, together with borrowings expected
to be approved under the Tomen Facility and other financing arrangements, such
as vendor financing and capital leases, will provide sufficient funds for the
Company to expand its business as planned and to fund its operating expenses
until at least September 1997, at which time the Company will require
significant additional funds. In the event that the Company's plans or
assumptions change or prove to be inaccurate, or its cash resources, together
with borrowings under the Tomen Facility and other financing arrangements prove
to be insufficient to fund the Company's growth and operations, or if financing
under the Tomen Facility or such other financing is not available or if the
Company successfully consummates any acquisitions, the Company may be required
to seek additional sources of capital sooner than currently anticipated.
Additional sources of capital may include public and private equity and debt
financings by the Company, sales of non-strategic assets and other financing
arrangements. There can be no assurance that the Tomen Facility or such
additional financing will be available
-3-
<PAGE>
to the Company or, if available, that it can be concluded on terms acceptable to
the Company. Failure to obtain such financing would result in the delay or
abandonment of some or all of the Company's development and expansion plans and
expenditures or the sale of the Company's interest in one or more networks,
which could have a material adverse effect on the Company's business.
The Company's ability to declare or pay cash dividends, if any, is
dependent upon the ability of the Company's present and future subsidiaries to
declare and pay dividends or otherwise transfer funds to the Company, because
the Company conducts its operations entirely through subsidiaries. Pursuant to a
credit agreement under the Tomen Facility, the Company's subsidiary that owns
and operates the San Bernardino and Ontario competitive access networks may not
pay any dividends or make any distributions on its capital stock to its
shareholders. Subsequent network financings under the Tomen Facility are
expected to include similar prohibitions.
-4-
<PAGE>
SCHEDULE D
GST USA, INC. (A)
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996 AND 1995
(UNAUDITED)
(STATED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
Current Assets $ 131,496,394 $ 9,138,634
Long Term Assets $ 89,558,110 $ 27,381,747
-----------------------------------------
TOTAL ASSETS $ 221,054,504 $ 36,520,381
=========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $ 13,353,806 $ 5,389,500
Long Term Liabilities $ 184,544,960 $ 8,635,459
Minority Interest $ 3,040,160 $ 3,512,124
-----------------------------------------
Total Liabilities $ 200,938,926 $ 17,537,083
-----------------------------------------
Share Capital $ 48,559,591 $ 20,699,656
Accumulated Deficit $ (28,444,013) $ (1,716,358)
-----------------------------------------
Total Shareholders' Equity $ 20,115,578 $ 18,983,298
-----------------------------------------
-----------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 221,054,504 $ 36,520,381
=========================================
</TABLE>
(A) GST USA, Inc. ("GUS") is a wholly-owned subsidiary of the Company. The
summarized financial information of GUS is for the six months ended March 31,
1996 and the comparable 1995 period. The total outstanding indebtedness of GUS
includes its senior discount notes with an accreted value of $166.3 million as
of March 31, 1996, which the Company fully and unconditionally has guaranteed.
Separate financial statements and other disclosures concerning GUS are not
presented because management has determined that they would not be material to
investors.
<PAGE>
SCHEDULE D
GST USA, INC.
CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(STATED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Sales $ 14,866,977 $ 5,187,378
Cost of Goods Sold $ 13,393,490 $ 2,971,334
----------------------------------------
Gross Margin $ 1,473,487 $ 2,216,044
----------------------------------------
Operating Expenses $ 11,651,728 $ 4,159,006
----------------------------------------
Operating Loss $(10,178,241) $ (1,942,962)
----------------------------------------
Other Expenses $ 8,818,145 $ 260,691
----------------------------------------
Operating Loss before Income taxes
and Minority Interest $(18,996,386) $ (2,203,653)
----------------------------------------
Income Taxes $ -- $ (37,779)
----------------------------------------
Operating Loss before Minority Interest $(18,996,386) $ (2,165,874)
----------------------------------------
Minority Interest $ 239,028 $ 689,005
----------------------------------------
Net Loss $(18,757,358) $ (1,476,869)
========================================
Deficit, Beginning of period $ (9,686,655) $ (239,489)
----------------------------------------
Deficit, End of period $(28,444,013) $ (1,716,358)
========================================
</TABLE>
<PAGE>
SCHEDULE D
GST USA, INC.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
FOR THE SIX MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(STATED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
1996 1995
Operations:
<S> <C> <C>
Loss for the Period $ (18,757,358) $ (1,476,869)
Items not involving cash $ 10,149,796 $ 340,891
Changes in Working Capital $ (3,185,514) $ 6,288,009
----------------------------------------
Cash provided by (used in) operations $ (11,793,076) $ 5,152,031
----------------------------------------
----------------------------------------
Cash provided by (used in) investing activities $ (23,467,534) $ (16,676,363)
----------------------------------------
----------------------------------------
Cash provided by (used in) financing activities $ 152,751,982 $ 14,945,454
----------------------------------------
Increase (decrease) in cash and cash equiavlents $ 117,491,372 $ 3,421,122
Cash and cash equivalents, beginning of period $ 3,893,676 $ 1,309,788
----------------------------------------
Cash and cash equivalents, end of period $ 121,385,048 $ 4,730,910
========================================
</TABLE>
<PAGE>
SCHEDULE E
GST TELECOMMUNICATIONS, INC.
Reconciliation between Generally Accepted Accounting
Principles in Canada and in the United States
These financial statements have been prepared by management in accordance
with generally accepted accounting principles in Canada. Except for the
loss per share calculation, these financial statements also conform in all
material respects, with those accounting principles that are generally
accepted in the United States. For U.S. GAAP purposes, loss per share is
$1.13 and $0.17 for the six months ended March 31, 1996 and 1995
respectively.
<PAGE>
INCORPORATION BY REFERENCE
This Form 6-K is incorporated by reference into the
Registrant's Registration Statements on Form F-3 (Registration
No. 33-95324, 33-97096 and 333-1538) and Registration Statement
on Form S-8 (Registration No. 33-94072).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GST Telecommunications, Inc.
----------------------------
(Registrant)
Date: May 13, 1996 By /s/ Robert H. Hanson
--------------------------
Robert H. Hanson
Senior Vice President
